Friday, April 9, 2010

How to miss the point completely, part 1

By the Economist.
The Economist's editorial on the election manages to be bland and completely misleading all at the same time.

First, they suggest that British 'voters deserve better' than what the parties are offering. On what grounds? Why do we think the parties are offering what they are offering? Because to come up with a 'radical vision' along the lines the Economist wants would lose votes. It seems to me that British voters are getting exactly what they want - obfuscation. Then I suppose they will complain afterwards that 'nobody said VAT would go up'.

Second, they talk at great length about our fiscal crisis without once mentioning the main reason for the crisis - the collapse of the financial sector. The crisis is mainly down to the collapse of City earnings that used to raise a big pile of tax revenue, and the need to bail out several institutions with huge amounts of public money. Not to mention the collapse in economic activity due to consumers belatedly figuring out that they shouldn't have borrowed all of that money that the banks were throwing at them.

No, the Economist didn't notice this. Instead, the deficit is all about 'sloppy, bloated benefits rolls' and wasteful spending on public services. Well, until the crisis the amount spent on welfare had gone down by quite a lot from the levels we got used to in the 1980s and 1990s. The money, in fact, goes on health, education, pensions and defence for the most part. And, sure, 'how much is spent matters less than how it is spent'. Efficiency could indeed improve. But to imagine that serious cuts can coexist with improved services is totally ridiculous.

In fact, cuts will lower quality, although probably by less than the amount saved in the short term. Just like in the 1980s. But in the long run, quality will decline, and by the time we've reduced our debt levels we'll probably want to start spending on health and education again.

In the meantime, the bankers have got away with it. A whole editorial on our fiscal crisis, and no mention that it was largely caused by the stupid behaviour of the richest people in the country.